Housing Markets Take Significant Downturn

Currently, housing prices and equities in Seattle, Washington have taken a significant decline. This once stable economy, said to be immune from the stock market crash of 2008, is now steadily collapsing. Since its peak in mid-2007, Seattle is down about thirty-one percent. Economists predict that its market still has at least ten percent to go. The rest of the United States is estimated to drop five to seven percent more as tax credits for home buyers are diminishing. A chief economist for a housing site called Zillow said, “We went into 2010 feeling gangbusters, thanks to Uncle Sam. We ended it feeling penniless, with home values tanking.” Believers in Seattle’s housing market are shocked to see how much the downturn in the economy has affected even this practically affluent area. Despite some restoration in the economy, housing is still very weak due to the failure of low-quality loans and individuals’ inability to obtain mortgages. The Obama administration has provided a few proposals to help homeowners become more comfortable, but only limited success has been achieved. Potential home buyers, having emptier wallets, are in no hurry to buy homes or property during this decline. But those who seek to sell their homes simply make an offer and hope that it is accepted as soon as possible. One family mentioned, the Klubberuds, bought a 960-square-foot townhouse on Capitol Hill in Seattle for $358,000. But due to their need for more space for future children, the family put the house on the market for $300,000 – a significant drop in the price that it had originally paid for it. The family hopes to use the declining market in order to find and buy a new home at a reasonable price. While some home owners refuse to settle and lower their home prices, others desperately accept the highest offer they receive, no matter how far from the original price. Many lose hope that the market will ever get better. An increasing number of people are drifting towards renting apartments instead of buying new homes, claiming that “rent is so cheap it doesn’t make sense to buy now.” In the last several weeks, mortgage rates have risen though. This might in turn persuade people to buy soon in fear that the rates will rise even more. Even those who have ample money and enough for down payments hesitate to buy until the economy improves. Buyer caution and hesitation is apparent during this housing crisis.

Hypothetically, if you were looking to buy a home in this current economy because of an expanding family, how would you approach this situation? Specifically, would you be hesitant to purchase a new home and wait until the economy got better or would you try to take advantage of the bad economy and buy before mortgage rates rose even more, and why?

http://www.nytimes.com/2011/02/14/business/economy/14dip.html?pagewanted=1&_r=1&sq=housing%20markets&st=cse&scp=1